COMPETITION BILL

Subject: Governance

Context: After incorporating certain reforms suggested by the CLRC, the draft Competition (Amendment) Bill, 2020 (Bill) was released for public comments. Now , Government is planning to table the bill in parliament.

Concept:

• The Competition Bill, 2020 seeks to amend the Competition Act.
• If the changes proposed by the MCA to the Competition Act are enacted, buyers forming a cartel may be penalised.
• It has sought to give monetary and penal powers to the director general for investigation under the CCI.
• It also seek to empower the director general for investigation to send a person to prison for up to 6 months or impose a fine of Rs 1 crore if the latter refuses to produce any document the former has asked for.
• The Bill has a provision of income, on which penalty could be imposed under Section 27 of the Competition Act.
• It has the word ‘income’ included in the Act, which may provide a legal basis to the CCI to impose penalties on individuals.

Clauses introduced

• The draft amendments also call for introducing a “commitment and settlement” clause in the Competition Act.
• The enabling clause will allow those found in contravention of the competition law to commit to correct their ways to avoid action even before investigation is completed.
• Even in cases where investigation is over, evidence has been found, and the adjudicating process has started, the companies can still enter a settlement.
• The companies will have to pay fine and avoid legal proceedings after ensuring that any anti-competitive practice will be corrected.

What does the Bill have to say about hub-and-spoke cartel?

• The proposed amendment seeks to provide clarity to these cartels.
• The MCA suggested hubs also be covered under Section 3(3), which deals with cartels that hinder competition.
• A hub-and-spoke cartel is basically an arrangement between companies where a dominant player (hub) is wooed by other firms (spoke), to destroy competition by, say, increasing or lowering prices.
• The hub-and-spoke agreements were not specifically covered under the Competition Act.

Impact on CCI’s powers

• The CCI has imposed penalties by independently invoking Section 3(1) of the Competition Act.
• However, the CCI’s powers to invoke Section 3(1) independently are pending adjudication before the Supreme Court.
• The proposed amendments also seek to expand the composition of the CCI by including part-time members in the Commission.
• The Commission is currently a 4-member body, including the chairman.